WEBVTT - Bloomberg Daybreak: June 16, 2022 - Hour 2 (Radio) 0:00:00.960 --> 0:00:04.439 Live from the Bloomberg Interactive Broker Studios. This is Bloomberg 0:00:04.519 --> 0:00:08.440 Daybreak for Thursday, June sixteenth, two. Coming up this hour, 0:00:08.600 --> 0:00:12.360 the post fed rally fades as US future slump recession 0:00:12.400 --> 0:00:15.360 fears return following the biggest interest rate increase since n 0:00:16.640 --> 0:00:19.599 It's the Bank of England's turn to increase the indust 0:00:19.680 --> 0:00:22.919 race and Elon Musk is set to address Twitter employees 0:00:23.000 --> 0:00:25.520 for the first time. The gunman who killed black people 0:00:25.520 --> 0:00:29.120 in a racist attack the Buffalo faces federal hate crimes charges, 0:00:29.320 --> 0:00:32.560 plus hearings resumed today on the January sixth Capitol Riot. 0:00:32.640 --> 0:00:35.760 I'm Michael Blar More ahead, I'm John Stash Howard sports 0:00:35.760 --> 0:00:37.680 another win for the Yankees, a loss for the Mets, 0:00:37.720 --> 0:00:40.440 Colorado on the Stanley Cup bottle Opener, and the US 0:00:40.520 --> 0:00:46.480 Open golf agains today. That's all strained ahead on Bloomberg 0:00:46.520 --> 0:00:50.319 Daybreak on Bloomberg Eliving Free on New York Bloomberg nine 0:00:50.560 --> 0:00:54.200 nine one, Washington d C, Bloomberg one O six one, Boston, 0:00:54.480 --> 0:00:59.200 Bloomberg nine sixties and Francisco Syrius XM one nineteen and 0:00:59.280 --> 0:01:02.080 around the world. Old on Bloomberg Radio dot Com and 0:01:02.120 --> 0:01:08.679 by the Bloomberg Business app. Good morning. I'm Nathan Hagar 0:01:08.800 --> 0:01:11.040 and I'm John Tucker. Bloomberg day Break being brought to 0:01:11.080 --> 0:01:13.679 you by Informatica. In the Cloud, your data has the 0:01:13.680 --> 0:01:17.320 power to be extraordinary. Managed data across any location of 0:01:17.400 --> 0:01:21.560 the clouds were accurate and actionable insights more at Informatica 0:01:21.760 --> 0:01:25.760 dot Com. Futures are slumping this morning. We're coming up 0:01:25.800 --> 0:01:27.440 to six o one on Wall Street, and we check 0:01:27.480 --> 0:01:29.680 the markets every fifteen minutes during the trading day. On 0:01:29.760 --> 0:01:33.080 Bloomberg SMP futures are down eighty four point, Staff futures 0:01:33.080 --> 0:01:36.080 down five dred forty six. Nasdaq futures are lower by 0:01:36.080 --> 0:01:39.800 three hundred twelve points. The tenure Treasury is onto decline 0:01:39.840 --> 0:01:42.640 down one in eight thirty seconds. The yield three point 0:01:42.640 --> 0:01:45.160 for three percent yield on the two year three point 0:01:45.160 --> 0:01:48.560 three seven percent John Well, Nathan. The reversal in futures 0:01:48.640 --> 0:01:52.040 comes after a rally yesterday following their latest decision for 0:01:52.080 --> 0:01:55.880 the Fed J. Powell engineering the biggest US interest rate 0:01:55.960 --> 0:01:59.840 increase in twenty eight years to fight inflation. Markets responded 0:02:00.080 --> 0:02:03.120 the rally that halted a five day ten percent rollity 0:02:03.160 --> 0:02:06.960 in the sp We at the FED understand the hardship 0:02:07.040 --> 0:02:10.280 that high inflation is causing. We're strongly committed to bringing 0:02:10.320 --> 0:02:13.960 inflation back down, and we're moving expeditiously to do so. 0:02:14.320 --> 0:02:16.160 We have both the tools we need and the resolve 0:02:16.200 --> 0:02:18.800 that it will take to restore price stability on behalf 0:02:18.840 --> 0:02:22.160 of American families and businesses. J Pal and Company raised 0:02:22.240 --> 0:02:25.160 rates by seventy basis points and lived with the target 0:02:25.240 --> 0:02:27.160 range for the federal funds rate to one and a 0:02:27.240 --> 0:02:30.480 half to one and three quarters percent. Former Richmond Fed 0:02:30.520 --> 0:02:34.320 president Jeffrey Lacker says more is needed. I think it's 0:02:34.360 --> 0:02:36.440 gonna have to go to about five and a half 0:02:36.560 --> 0:02:40.799 or six percent. That's my own sense, and that's based 0:02:40.840 --> 0:02:45.680 on just the historical record. Uh that indicates that real 0:02:45.760 --> 0:02:49.600 interest rates, inflation adjusted short term policy rates have to 0:02:49.680 --> 0:02:53.120 get above zero in order to have any chance of 0:02:53.240 --> 0:02:57.360 frustraining inflation. Former Fed Bank of Richmond president Jeffrey Lacker, 0:02:57.360 --> 0:03:00.600 who says the Fed should have raised rates last year. Well, 0:03:00.600 --> 0:03:02.720 this rate high John now has many on Wall Street 0:03:02.720 --> 0:03:05.880 forecasting a recession for the US economy. We caught up 0:03:05.880 --> 0:03:09.960 with Guggenheim Chief investment officers Scott minored, there's a chance 0:03:10.400 --> 0:03:14.560 that we are already in a recession. And so if 0:03:14.600 --> 0:03:16.880 if we are in a recession or we're close to 0:03:16.919 --> 0:03:20.320 a recession, and the FED pushes on this more and 0:03:20.320 --> 0:03:22.360 then we find that that all of a sudden we 0:03:22.400 --> 0:03:25.239 have a decline in asset prices like stocks did in 0:03:25.360 --> 0:03:29.320 eight seven, then uh, if the Fed reversus course, they're 0:03:29.320 --> 0:03:32.880 gonna look like they're week on inflation. So this this 0:03:32.960 --> 0:03:37.120 is a very very tough situation that we're maneuvering. Googgenheim 0:03:37.200 --> 0:03:40.080 Chief investment Officers Scott Miner says cracks are forming in 0:03:40.080 --> 0:03:42.440 the credit world. He says the worst is probably not 0:03:42.600 --> 0:03:45.480 over and after the Fed, now it's the Bank of 0:03:45.640 --> 0:03:49.000 England's decision. Investors in economists are betting the UK Central 0:03:49.000 --> 0:03:52.560 Bank would deliver a fifth straight hike later this morning, 0:03:52.880 --> 0:03:55.800 raising the base rate by twenty five basis points to 0:03:55.920 --> 0:03:58.960 a thirteen year high of one point to five percent, 0:03:59.440 --> 0:04:01.960 But former Bank of Angland viavnor Mark Garney says that 0:04:02.040 --> 0:04:06.680 he thinks policymakers are folding behind real world events. I 0:04:06.680 --> 0:04:08.960 think what's clear as central bankers need to catch up 0:04:09.000 --> 0:04:12.360 to their economies. They've you know, they've been behind the curves. 0:04:12.360 --> 0:04:15.360 They've acknowledged this um and they need to start to 0:04:15.440 --> 0:04:21.280 get interest rates uh above inflation effectively, or at least 0:04:21.520 --> 0:04:25.640 perspective inflation inflation expectation. Mark Arney stepped down from the 0:04:25.760 --> 0:04:28.040 Central Bank of twenty He is now a vice chair 0:04:28.040 --> 0:04:31.120 at Brookfield Asset Management. We have another interest rate decision 0:04:31.120 --> 0:04:33.240 in Europe to tell you about, John. The Swiss National 0:04:33.279 --> 0:04:36.080 Bank unexpectedly raised its interest rates for the first time 0:04:36.120 --> 0:04:39.400 since two thousand seven. Policymakers ompted to join the global 0:04:39.440 --> 0:04:42.560 bandwagon of monetary tightening, lifting the policy rate by fifty 0:04:42.600 --> 0:04:46.320 basis points to negative zero point to and staying in Europe. 0:04:46.400 --> 0:04:49.359 Natural gas prices jumping after Russia has stepped up a 0:04:49.480 --> 0:04:54.080 new energy war, cutting supplies to Europe's top buyers. Let's 0:04:54.120 --> 0:04:57.919 get more from Bloomberg Energy reporter Stephen Sovsnavsky. This is 0:04:57.920 --> 0:04:59.599 a big deal, and this is like the worst case 0:04:59.600 --> 0:05:03.279 scenario that that traders were expecting in Europe. Absolutely, it 0:05:03.440 --> 0:05:06.599 is um you know, for for weeks, for months, you know, 0:05:06.600 --> 0:05:08.760 when this war broke out, the fear was Russia was 0:05:08.800 --> 0:05:11.320 going to curb supply to customers, and they curb to 0:05:11.400 --> 0:05:15.559 some customers. They curb to Poland, to Bulgaria, they curbed 0:05:15.600 --> 0:05:19.040 to these countries. But they're not major buyers. Germany is 0:05:19.080 --> 0:05:22.760 a major buyer. And this pipeline they've the North Stream 0:05:22.760 --> 0:05:27.120 one that cut supply my well, the European benchmark rose 0:05:27.200 --> 0:05:29.960 as much as twelve percent a day after surging by 0:05:31.279 --> 0:05:34.039 in the previous two sessions. Thank Here in the US, John, 0:05:34.080 --> 0:05:36.360 the White House says President Biden is willing to use 0:05:36.400 --> 0:05:40.200 emergency measures to ramp up gasoline output. Bloomberg said, Baxter 0:05:40.320 --> 0:05:42.920 has the story. This is the same Cold War era 0:05:43.000 --> 0:05:45.839 law he invoked to increase production of baby formula and 0:05:45.880 --> 0:05:50.159 bolster solar manufacturing. Biden saying his administration is prepared to 0:05:50.279 --> 0:05:55.479 use all reasonable government tools to increase refinery capacity. Meanwhile, 0:05:55.480 --> 0:05:58.440 the White House spokesman Karen Jean Pierre says the oil 0:05:58.480 --> 0:06:01.480 companies need to step up, calling on them to do 0:06:01.520 --> 0:06:04.360 the right thing, to be patriots here uh and not 0:06:04.440 --> 0:06:08.320 to use the war as an excuse for higher costs 0:06:08.400 --> 0:06:12.119 leading to higher profits. In San Francisco, I'm at Baxter 0:06:12.240 --> 0:06:15.360 Bloomberg day breaking Thanks that incorporated news, A big day 0:06:15.440 --> 0:06:18.440 for Twitter and Elon Musk. Let's get the latest live 0:06:18.520 --> 0:06:23.159 from Bloomberg's Rena Young Morning. John. Elon Musk is addressing 0:06:23.160 --> 0:06:26.279 Twitter employees for the first time today since agreeing to 0:06:26.320 --> 0:06:29.479 buy the company for forty four billion dollars. At the 0:06:29.560 --> 0:06:33.599 virtual meeting, Musk will take questions directly from employees, many 0:06:33.720 --> 0:06:37.080 of who have not been happy with him lately. Meantime, 0:06:37.120 --> 0:06:40.680 Twitter CEO recently announced a series of cost cutting measures, 0:06:40.720 --> 0:06:43.960 including canceling the company wide retreat that was scheduled to 0:06:44.000 --> 0:06:48.560 happen in January twenty three and a hiring freeze. Live 0:06:48.600 --> 0:06:51.480 in New York, I'm Rernita Young Bloomberg Day Break, Thanks Nita, 0:06:51.520 --> 0:06:53.920 and a big name in the cosmetic style is filing 0:06:53.920 --> 0:06:57.960 for bankruptcy. Revlon is applying for Chapter eleven protection. The company, 0:06:57.960 --> 0:07:00.320 owned by billionaire Ron Perlman, has been unable to manage 0:07:00.360 --> 0:07:03.719 it's heavy debtload. Revlin got its start selling nail Polishy 0:07:03.720 --> 0:07:06.200 in the throes of the Great Depression. Promins Holding Company 0:07:06.240 --> 0:07:10.040 took control in five after a bitter takeover funded with 0:07:10.160 --> 0:07:14.360 junk debt raised by Michael Milken. Futures are falling this morning. 0:07:14.400 --> 0:07:16.760 Straight ahead, we have your latest local headlines and a 0:07:16.840 --> 0:07:24.040 check of sports. This is Bloomberg all right, Thanks Nathan 0:07:24.080 --> 0:07:26.080 six Oh settled on Wall Street time to bring in 0:07:26.160 --> 0:07:28.360 Michael Barr to find out what else is going on 0:07:28.440 --> 0:07:31.040 in New York and around the world. John, thank you 0:07:31.120 --> 0:07:33.440 very much, sir. The gunman who killed ten black people 0:07:33.520 --> 0:07:36.320 in a racist attack at a Buffalo supermarket has been 0:07:36.400 --> 0:07:40.080 charged with federal hate crimes that could potentially carry a 0:07:40.200 --> 0:07:43.440 death penalty the Department of Justice, as eighteen year old 0:07:43.480 --> 0:07:47.240 Peyton Gendren told investigators his goal was to kill as 0:07:47.280 --> 0:07:51.239 many black people as possible. Attorney General Merritt Garland visited 0:07:51.240 --> 0:07:54.560 at the Top supermarket where the shooting happened. Hate fueled 0:07:54.600 --> 0:07:58.320 acts of violence terrorized not only the individuals who are 0:07:58.360 --> 0:08:05.680 all attacked, but entire communities. Hate brings media devastation, and 0:08:06.000 --> 0:08:11.120 it inflicts lasting fear. Attorney General Garland placed flowers at 0:08:11.160 --> 0:08:15.280 a memorial and men with families. Lawyers for British socialite 0:08:15.320 --> 0:08:18.200 Galaine Maxwell say she should face no more than four 0:08:18.280 --> 0:08:21.400 to five years in prison at sentencing later this month 0:08:21.640 --> 0:08:25.000 for her role in financier Jeffrey Epstein's sex abuse of 0:08:25.080 --> 0:08:28.560 teenage girls. Epstein took his own life in August of 0:08:28.920 --> 0:08:32.920 nineteen while awaiting a sex trafficking trial in Manhattan. The 0:08:33.040 --> 0:08:35.560 role of former Vice President Mike Pence will be a 0:08:35.600 --> 0:08:39.760 major focus of Today's congressional hearing on last year's Capital riot, 0:08:40.000 --> 0:08:42.840 the January six committee will focus on the pressure put 0:08:42.880 --> 0:08:45.720 on Pence that day and includes efforts to keep Pence 0:08:45.760 --> 0:08:49.960 from certifying President Biden's election victory. The House January six 0:08:50.040 --> 0:08:55.160 elect Committee released video showing Republican Georgia Representative Buried louder 0:08:55.200 --> 0:08:58.559 Milk leading constituents on a tour around the Capitol complex 0:08:58.840 --> 0:09:02.640 on January f The committee claimed one of the participants 0:09:02.640 --> 0:09:04.720 in the two were marched to the Capitol the next 0:09:04.800 --> 0:09:08.760 day and may detail threats against members of Congress. New 0:09:08.840 --> 0:09:13.960 York Democratic Congress Remember Alexandria Ocassio Cortez and the fact 0:09:13.960 --> 0:09:16.880 that he was inviting and letting people in that he 0:09:17.000 --> 0:09:19.360 did not know when the capital was close to the public. 0:09:20.720 --> 0:09:22.160 The fact that he was giving a tour at all 0:09:22.920 --> 0:09:29.600 is extremely concerned. Representative Occassio Cortez spoke to ABC. Congressman 0:09:29.640 --> 0:09:33.360 Loudermulk has denied any wrongdoing. COVID vaccines for infants and 0:09:33.400 --> 0:09:36.199 Toddler's from MODERNA and Visor one support from a panel 0:09:36.240 --> 0:09:39.920 of US regulatory advisors. The Committee advising the FDA voted 0:09:40.000 --> 0:09:43.720 unanimously in favor of Viser's three dose vaccine for youngsters 0:09:43.760 --> 0:09:46.120 ages six months through four years. It also gave a 0:09:46.160 --> 0:09:50.480 strong endorsement to Moderna's two Dose for children six months 0:09:50.600 --> 0:09:53.560 through five years. Global News twenty four hours a day 0:09:53.600 --> 0:09:56.120 on air end on Bloomberg Quick Tank, powered by more 0:09:56.320 --> 0:09:58.880 than twenty seven hundred journalists analysts more than a hundred 0:09:58.880 --> 0:10:01.800 twenty countries. I'm like Labar, this is Bloomberg, John Michael, 0:10:01.800 --> 0:10:08.280 thank you. Sound sixteen of walls free, best time for 0:10:08.320 --> 0:10:11.800 the Bloomberg Sports Update. Here's John Stasher, All right, John Scott. 0:10:11.800 --> 0:10:14.240 Often you see a team be thirty games over five 0:10:14.360 --> 0:10:17.080 hundred and mid June. But the Yankees are forty six 0:10:17.160 --> 0:10:19.559 and sixteen at stadium and Aaron Judge Holmes run first, 0:10:19.600 --> 0:10:22.040 hitting the twenty five. That's seven more than anyone else 0:10:22.040 --> 0:10:25.160 in the majors. Three run shot for Kyle Agashi Yoka 0:10:25.240 --> 0:10:27.920 fifth and he hadn't homer all year until he hit 0:10:27.960 --> 0:10:29.839 two just this past Sunday, and now he's got a third. 0:10:29.880 --> 0:10:32.480 Yanks be Table Bay four to three. Nest Court has 0:10:32.480 --> 0:10:34.319 to win the other's safe for Clay Homes in City 0:10:34.360 --> 0:10:37.000 Field night to forget for the Mets, who lost in Milwaukee, 0:10:37.040 --> 0:10:39.440 tend to two in Atlanta one again. The Braves are 0:10:39.440 --> 0:10:42.000 at fourteen and oh in June and they're now four 0:10:42.040 --> 0:10:44.079 games behind the Mets. Second straight night of near no 0:10:44.240 --> 0:10:48.240 hitter that Dodgers Tyler Anderson lost it when Shoeotani hit 0:10:48.280 --> 0:10:50.800 a triple with one out in the ninth inning overtime 0:10:50.800 --> 0:10:53.320 to start Stanley Cup Final. Colorado Blue a three one league, 0:10:53.320 --> 0:10:56.640 but got a goal from Andre Barakowski minute twenty three 0:10:56.640 --> 0:10:59.240 and oh t for a four three game one victory 0:10:59.400 --> 0:11:01.360 over tamp of May. To night in Boston, it's Game 0:11:01.440 --> 0:11:03.800 six of the NBA Finals. Either Golden State wins the 0:11:03.880 --> 0:11:06.960 championship or it's back to San Francisco for a game seven. 0:11:07.000 --> 0:11:09.480 And what a sports day in Boston because this morning 0:11:09.920 --> 0:11:12.720 they too off to begin the US Open Country Club 0:11:12.720 --> 0:11:15.360 of Brookline, of course, that first hosted they open in 0:11:15.480 --> 0:11:19.040 nineteen thirteen with a victory by Brookline native Francis. We 0:11:19.200 --> 0:11:22.760 met Roy McElroy looking forward to plane in historic court. 0:11:22.800 --> 0:11:25.280 That is what's so good about golf is the history, 0:11:25.280 --> 0:11:28.600 in the tradition and these stories. Um. You know the 0:11:28.640 --> 0:11:33.160 fact that he grew up just off the seventeen goal here, um, 0:11:33.200 --> 0:11:35.160 and we're still talking about it to this day. Over 0:11:35.200 --> 0:11:37.360 a hundred years old, Like that's so cool. That's the 0:11:37.400 --> 0:11:39.640 great thing about this sport. McIlroy has got an early 0:11:39.640 --> 0:11:42.679 tea time, so does Defenny Champ. John Ram updates throughout 0:11:42.679 --> 0:11:45.520 the attorney here on Bloombrig Radio. John Stanshard bloom Brig Sports, 0:11:45.600 --> 0:11:47.880 John all right, Thanks John. Ahead of the cash open 0:11:47.920 --> 0:11:52.000 on Wall Street. After yesterday's rally, Futures this morning firmly 0:11:52.080 --> 0:11:55.840 in the red Dalla futures down four hundred nineties seven points, 0:11:56.240 --> 0:12:00.400 SMP eveny futures seventy six points. Lower futures down two 0:12:00.520 --> 0:12:07.320 hundred seventy seven points. This is Daybreak, Bloomberg Daybreak Bronck 0:12:07.360 --> 0:12:10.760 you by Hofstra University's Frank gez Arm School of Business, 0:12:11.040 --> 0:12:14.880 top running to online NBA program with a real world foundation. 0:12:15.200 --> 0:12:17.959 Learn more at Hofster dot e d u slash go 0:12:18.240 --> 0:12:25.760 grad Markets, headlines and breaking news twenty four hours a day, 0:12:25.920 --> 0:12:28.880 at Bloomberg dot Com, The Bloomberg Business at and at 0:12:28.880 --> 0:12:38.839 Bloomberg Quick Tape. He's a Bloomberg Business Lash. I'm Nathan Hager. 0:12:38.920 --> 0:12:41.400 The stock rally that followed the FED supersized rate high 0:12:41.480 --> 0:12:45.560 yesterday has evaporated as recession fears take over This market. 0:12:45.600 --> 0:12:48.000 We check the numbers every fifteen minutes during the trading day. 0:12:48.000 --> 0:12:51.160 On Bloomberg, STP futures down down seventy eight point. STOUT 0:12:51.200 --> 0:12:54.560 futures down five eleven. Nasdaq futures are lower by two 0:12:54.840 --> 0:12:57.640 d ninety points. The tenure Treasury is down one in 0:12:57.760 --> 0:13:00.840 eight thirty seconds. The yield three point or three percent 0:13:00.920 --> 0:13:04.280 of fifteen basis points two year yield three point pree 0:13:04.360 --> 0:13:07.600 five percent. Dimex screwed is down two tenths percent at 0:13:07.600 --> 0:13:10.440 a hundred fifteens a barrel. Comex called up two tenths 0:13:10.440 --> 0:13:13.720 percent at eighteen seventy announced. The euro one point zero 0:13:13.720 --> 0:13:16.040 four zero six against the dollar in agin is at 0:13:16.040 --> 0:13:19.120 one thirty three point one five. That's a Bloomberg business flash. 0:13:19.160 --> 0:13:21.079 Now here's Michael Barr with more on what's going on 0:13:21.200 --> 0:13:23.680 around the world. Michael Nathan, thank you very much. The 0:13:23.760 --> 0:13:26.960 January six Committee is plunging into Donald Trump's efforts to 0:13:26.960 --> 0:13:30.640 pressure Vice President Mike Pence to reject the electoral count. 0:13:30.920 --> 0:13:34.520 At today's hearing, testimony is expected from retired federal judge 0:13:34.559 --> 0:13:37.560 Michael Luddick, who called the plan incorrect at every turn. 0:13:38.000 --> 0:13:40.439 In baseball, the red hot Yankees one again. The Mats 0:13:40.520 --> 0:13:43.560 lost along with the Nationals, Orioles and Giants. The Red 0:13:43.600 --> 0:13:46.280 Sox beat the A's Game one in the NHL Final. 0:13:46.600 --> 0:13:50.079 The Avalanche beat the Lightning in overtime. Global News twenty 0:13:50.080 --> 0:13:52.920 four hours a day on air and on Bloomberg Quick Take, 0:13:53.160 --> 0:13:55.720 powered by more than twenty seven hundred journalists and analyst 0:13:55.840 --> 0:13:58.000 more than a hundred twenty countries. I'm Michael Barr. This 0:13:58.040 --> 0:14:01.160 is Bloomberg, John Michael, thank you, six Ena Wall Street. 0:14:01.240 --> 0:14:04.120 We are live from the Bloomberg INTERACTI Broker's Studios. This 0:14:04.520 --> 0:14:08.480 is Bloomberg daybreak Feed. Reserved chair Jerome Powell seems to 0:14:08.520 --> 0:14:13.160 have acknowledged that reigning and inflation may result in a recession. 0:14:13.800 --> 0:14:16.920 Let's get more now against today's Fed meaning. Allen Sander Mortgang, 0:14:17.120 --> 0:14:20.080 Stanley's chief of U S E Commerce, joins us this morning. 0:14:20.520 --> 0:14:23.520 A pleasure, good to talk to Allen. Um, how far 0:14:23.600 --> 0:14:27.520 into restrictive territory is the FED willing to go at 0:14:27.520 --> 0:14:38.120 this point? Ellen Sender, can you hear us? Can? All right? 0:14:38.160 --> 0:14:41.520 Sorry having I have a little trouble with the line there, Ellen, 0:14:41.600 --> 0:14:44.200 But let me just repeat the question for you. How 0:14:44.240 --> 0:14:48.440 far into a restrictive territory. Is this FED willing to 0:14:48.480 --> 0:14:52.320 go at this point? Yes, I think the message from 0:14:52.320 --> 0:14:55.360 Pale yesterday was not quite the will do whatever it 0:14:55.400 --> 0:15:00.760 takes message that we were expecting. But to acknowledge that 0:15:00.840 --> 0:15:05.440 recession could be an outcome is really realistic. I mean, 0:15:05.800 --> 0:15:08.080 you know, we've not had to deal with accelerating inflation 0:15:08.120 --> 0:15:12.080 in a very long time. Before the Great Moderation, it 0:15:12.200 --> 0:15:15.880 was pretty standard that an acceleration inflation led recessions because 0:15:15.920 --> 0:15:18.360 of the FED response. And if that's what it takes 0:15:18.360 --> 0:15:20.280 to get inflation down. If the Dead's not able to 0:15:20.280 --> 0:15:23.640 slow the economy enough or overdoes it, it can't course 0:15:23.640 --> 0:15:29.680 correct fast enough, well, then recession is the obvious uh 0:15:29.840 --> 0:15:32.320 in game there. I don't think investors should be that 0:15:32.400 --> 0:15:36.320 scared of it though. Okay, but the upper bound somewhere 0:15:36.360 --> 0:15:40.800 three and a quarter to three fifty. Uh, that has moved. 0:15:40.800 --> 0:15:45.280 But is that enough at this point? Do you think? Yeah, 0:15:45.360 --> 0:15:47.440 you know, we'll see. I mean, the market was pricing 0:15:47.440 --> 0:15:49.720 an even higher peak rate and the SAD funds rate 0:15:50.520 --> 0:15:53.600 before this meeting, but some of that is the investors 0:15:53.600 --> 0:15:55.800 have had to put a greater weight on the possibility 0:15:55.800 --> 0:15:58.120 of procession so the FED can go it high as 0:15:58.160 --> 0:16:01.040 the FED wants to go, but it preaches the ecmmune 0:16:01.080 --> 0:16:05.000 recession and has to back out some of those rate hikes. 0:16:05.000 --> 0:16:08.120 And I think that's what we're seeing in terms of investors. 0:16:08.120 --> 0:16:09.960 Assuming the Feds may be able to only go as 0:16:10.080 --> 0:16:12.680 high as three and a half percent, I think with 0:16:13.080 --> 0:16:15.240 the path of inflation that we envisioned, the FED is 0:16:15.240 --> 0:16:17.760 going to have to go higher than that. UH and 0:16:17.920 --> 0:16:20.920 Charepel is very confident that he is the leader to 0:16:20.960 --> 0:16:24.040 be nimble enough to do that course correction, similar as 0:16:24.080 --> 0:16:26.440 something that they did in Twinning eight team. They pivoted 0:16:26.520 --> 0:16:29.240 very quickly when they saw liquidity troubles and the global 0:16:29.280 --> 0:16:35.160 slowdown UM, and they were able to UH stabilize economic conditions. Unfortunately, 0:16:35.680 --> 0:16:38.720 COVID hit, but you can't test how long those conditions 0:16:38.800 --> 0:16:41.520 might have been stable. But what we like to call, 0:16:41.960 --> 0:16:48.040 you know, UM recession is really opportunistic disinflation because when 0:16:48.040 --> 0:16:50.480 the economy is in a downturn, it tends to take 0:16:50.560 --> 0:16:53.480 steam off of inflation. It has that gravitational pool, and 0:16:53.520 --> 0:16:56.040 so if the FED can't do it alone from taking 0:16:56.120 --> 0:16:59.760 rates into restricted territory, they'll have to go even further UM. 0:16:59.760 --> 0:17:03.640 And a recession is a risk they're willing to take. Right, 0:17:03.960 --> 0:17:09.679 Is this the inflation simply demand driven? How complicated is 0:17:09.720 --> 0:17:15.240 the fix and doesn't really test UH of FED policy? Yeah? 0:17:15.240 --> 0:17:17.959 So I think John, we're past the point of of 0:17:18.000 --> 0:17:20.680 worrying if it's demand or supply driven. I mean, I'm 0:17:20.760 --> 0:17:23.560 I'm in the camp that it's both. That You've got 0:17:23.720 --> 0:17:28.200 UH in even more acute lack of goods and availability 0:17:28.200 --> 0:17:30.640 of labor at a time when we have a lot 0:17:30.680 --> 0:17:33.200 of tip of demand in the in the country now 0:17:33.240 --> 0:17:36.439 it's pink of demand for services and travel and leisure 0:17:36.440 --> 0:17:41.080 and hospitality and enjoying ourselves. Um. But but you know, 0:17:41.119 --> 0:17:42.840 we have to get past that and just say, look, 0:17:42.920 --> 0:17:47.440 whatever the supplied destructions are, whatever is creating higher inflation, 0:17:47.800 --> 0:17:51.240 the FED needs to force demands lower in the economy 0:17:51.480 --> 0:17:55.160 to align with that, to align with tighter supply and 0:17:55.240 --> 0:17:57.159 bring demand down. So it just means that they have 0:17:57.160 --> 0:18:00.520 a bigger job to do, UH to do here. So 0:18:00.680 --> 0:18:05.040 what's going to happen on the employment front? Well, on 0:18:05.080 --> 0:18:08.199 the employment for jobs have to slow, I mean not 0:18:08.280 --> 0:18:10.640 in the near term. I think all the indicators are 0:18:10.640 --> 0:18:13.880 that employers are still hiring. My concern is that what 0:18:13.920 --> 0:18:18.159 we're hearing from our companies is that we have filled 0:18:18.200 --> 0:18:21.679 the need to have jobs and we're going to close 0:18:21.720 --> 0:18:23.960 out the nice to have jobs. And I think we're 0:18:24.000 --> 0:18:25.960 really going to see that in the fourth quarter. It's 0:18:25.960 --> 0:18:29.280 gonna look like the job market has much more slack 0:18:29.320 --> 0:18:33.160 in it um than the SAID has assumed. UM. If 0:18:33.200 --> 0:18:36.080 that is the case, then the SAID may recognize that 0:18:36.160 --> 0:18:39.000 and not have to take rates um as far because 0:18:39.040 --> 0:18:40.960 it's really that slack in the labor markets that they're 0:18:41.000 --> 0:18:44.280 looking for. We need to slow the economy to take 0:18:44.359 --> 0:18:46.399 some pressure off of the labor market and raise the 0:18:46.440 --> 0:18:49.520 unemployment rate. That's that's the ugly truth of it. I've 0:18:49.560 --> 0:18:53.000 seen a number of comparisons to the vulgar era. Are 0:18:53.000 --> 0:18:58.080 those comparisons valid? I think in terms of the message 0:18:58.080 --> 0:19:01.240 of doing whatever it takes. In terms of the urgency 0:19:01.480 --> 0:19:05.760 UH and UH the intolerance for sustain higher levels of 0:19:05.800 --> 0:19:10.720 inflation that is absolutely bulker like area UM having to 0:19:10.760 --> 0:19:13.760 take rates high enough to get the economy into deep 0:19:13.800 --> 0:19:17.280 de profession I don't believe that's the case. We also 0:19:17.359 --> 0:19:20.320 don't have a wage price spiral. We're actually seeing things 0:19:20.320 --> 0:19:22.960 in liked market work like they should. Retail. We've seen 0:19:22.960 --> 0:19:27.480 a surgeon restaurants. We've seen the surgeon applications. Wage pressures 0:19:27.280 --> 0:19:29.760 are coming off in that sector. As we get more 0:19:29.760 --> 0:19:32.639 people back to work. Things are working like they should, 0:19:33.080 --> 0:19:36.880 They're just not working quickly. Allen always a pleasure. Ellen 0:19:36.920 --> 0:19:40.040 Center Market, Stanley's chief US economists with us this morning. 0:19:40.320 --> 0:19:44.320 Jaffy yesterday's rally. It is a risk off for the moments. 0:19:44.600 --> 0:19:47.520 Dalla futures right now five hundred forty three points lower, 0:19:48.040 --> 0:19:50.360 the S and B in many futures down to eighty five. 0:19:50.480 --> 0:19:54.760 Nasday features three hundred and fifteen points lower ten year 0:19:54.840 --> 0:19:58.160 yield right now three forty three. That is a fourteen 0:19:58.480 --> 0:20:01.560 basis points of the This morning, you're listening to the 0:20:01.600 --> 0:20:09.359 Bloomberg day Break Bloomberg Weather from mediologists Rob Carolin Partlet 0:20:09.520 --> 0:20:14.560 mostly cloudy, chance of a showering thunderstorm behind today, Mostly 0:20:14.560 --> 0:20:18.280 cloudy tonight, lows dipping to around seventy degrees. This is 0:20:18.320 --> 0:20:25.200 Bloomberg Markets, headlines and breaking news twenty four hours a 0:20:25.280 --> 0:20:28.120 day at Bloomberg dot com for the Bloomberg Business at 0:20:28.240 --> 0:20:38.640 and at Bloomberg Quick Tape is a Bloomberg Business lash. 0:20:39.080 --> 0:20:41.960 I'm Nathan Hagar. Well, so much for the Post fed 0:20:42.119 --> 0:20:45.320 rally futures are diving this morning. We go live to 0:20:45.400 --> 0:20:47.880 the First Word Breaking news desk for today's morning call. 0:20:47.960 --> 0:20:51.440 Here's Bill Maloney. Good morning, Bill, Hey, good morning Nathan. 0:20:51.480 --> 0:20:54.360 That's right. US futures are plunging right now, with DOWN 0:20:54.359 --> 0:20:58.000 futures down six hundred points says He's drop, and nasdeck 0:20:58.040 --> 0:21:02.000 futures are lower by three huntrewy four the US ten 0:21:02.160 --> 0:21:04.720 Ye know that three point for three percent, Gold is 0:21:04.760 --> 0:21:07.240 down eleven, oil is in the red, and Bitcoin is 0:21:07.280 --> 0:21:10.640 down by another two point seven percent. Hong Kong fell 0:21:10.680 --> 0:21:13.440 two point two percent overnight, while Europe markets are also 0:21:13.480 --> 0:21:16.159 in the red, led by three percent losses in Italy 0:21:16.480 --> 0:21:19.840 and note the Swiss National Bank surprise markets with its 0:21:19.880 --> 0:21:23.320 first interest rate hike in fifteen years. Back in the US, 0:21:23.400 --> 0:21:26.520 on the economic Frinday thirty initial jobs claims, Housing starts, 0:21:26.800 --> 0:21:30.560 and Philly fed Regarding earnings, look for Kroger and Jabil 0:21:30.600 --> 0:21:33.520 to report in the pre market. In other news, Tessela 0:21:33.640 --> 0:21:37.200 increased prices across its lineup and Revlon filed for chapter 0:21:37.280 --> 0:21:40.320 eleven wrapping things up. Auto Zonner was raised to overweight 0:21:40.359 --> 0:21:44.280 at Morgan Stanley. Boeing was upgraded rats City Group Live 0:21:44.359 --> 0:21:47.400 from the first Breaking News Daskam Bill Maloney, Nathan Okay, Bill, 0:21:47.400 --> 0:21:50.159 thanks you get live breaking news over your Bloomberg type 0:21:50.200 --> 0:21:52.960 squawk on the terminal. S qu a go is how 0:21:53.000 --> 0:21:55.359 you do it? That's the Bloomberg Business Flash. Now here's 0:21:55.400 --> 0:21:58.040 Michael Barr with more on what's going on around the world. Michael, 0:21:58.160 --> 0:22:00.560 thank you very much. Nathan. The House Committee and investigating 0:22:00.600 --> 0:22:04.960 the January Riot is holding its third public hearing today. 0:22:05.080 --> 0:22:07.840 The panel is expected to focus on threats against former 0:22:07.960 --> 0:22:11.720 Vice President Pence. Less than two weeks after restarting production, 0:22:12.119 --> 0:22:15.440 Abbot's troubled infant formula plan in Michigan is now being 0:22:15.480 --> 0:22:19.160 forced to shut back down again. Torrential storms cause power 0:22:19.240 --> 0:22:22.840 outages and flooded parts of their facility. In baseball, the 0:22:22.880 --> 0:22:25.760 Yankees one, the Mets lost, along with the Nationals, Orioles 0:22:25.760 --> 0:22:28.480 and Giants. The Red Sox beat the A's in Game 0:22:28.520 --> 0:22:31.280 one of the NHL Final. The Avalanche beat the Lightning 0:22:31.280 --> 0:22:34.480 and overtime. Thus Celtics will try to stay alive tonight 0:22:34.520 --> 0:22:37.600 in Game six of the NBA Finals. The Warriors could 0:22:37.640 --> 0:22:40.360 win it all tonight. In Boston, Global News twenty four 0:22:40.400 --> 0:22:43.840 hours a day on air and on Bloomberg Quicktake, powered 0:22:43.840 --> 0:22:46.680 by more than journalists and analysts and more than a 0:22:46.760 --> 0:22:50.720 hundred twenty countries. Michael Barr and this is Bloomberg, Nathan, 0:22:50.800 --> 0:22:53.359 Thank you, Michael. It is sixty nine on Wall Street. 0:22:53.440 --> 0:22:56.000 Let's turn out to news in science and technology. The 0:22:56.000 --> 0:22:58.600 Bloomberg n j I T STEM Report is brought to 0:22:58.640 --> 0:23:01.320